Lesson 3.5.2.1

3.5.2.1 Budgets, cash flow forecasts and break-even analysis Quiz: AQA Business, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.5.2.1, Budgets, cash flow forecasts and break-even analysis: 20 multiple choice questions for the AQA Business (7132), Unit 5: Financial management, written with Revision Ninja.

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The 20 questions

  1. What occurs at a business's break-even level of output?

    • Zero fixed costs
    • Maximum gross profit
    • Revenue equals costs
    • Variable costs dominate

  2. Contribution per unit equals selling price per unit minus what?

    • Variable cost per unit
    • Net profit per unit
    • Total cost
    • Fixed cost per unit

  3. What does the margin of safety measure?

    • Output above break-even
    • Maximum capacity output
    • Profit minus costs
    • Revenue minus costs

  4. What defines an adverse financial variance?

    • Worse than budgeted
    • Better than budgeted
    • Matching the budget
    • Zero actual variance

  5. What is a key benefit of setting a budget?

    • Eliminating business risk
    • Maximising share price
    • Guaranteeing sales growth
    • Monitoring financial performance

  6. How is total contribution calculated for a business?

    • Revenue minus costs
    • Selling price x output
    • Fixed costs x output
    • Unit contribution x output

  7. What does a cash flow forecast predict?

    • Future cash balances
    • Shareholder dividend payments
    • Long-term asset values
    • Total annual profit

  8. A product has a price of 20 and variable cost of 8, with fixed costs of 60,000. What is the break-even output?

    • 5,000 units
    • 3,000 units
    • 7,500 units
    • 12,000 units

  9. Using the same product, what is the break-even revenue?

    • 60,000
    • 100,000
    • 40,000
    • 160,000

  10. A business sells 7,500 units and its break-even output is 5,000 units. What is its margin of safety in units?

    • 12,500 units
    • 5,000 units
    • 7,500 units
    • 2,500 units

  11. Using the same product and 7,500 units sold, what is the profit?

    • 150,000
    • 60,000
    • 30,000
    • 90,000

  12. If selling price rises while costs remain unchanged, break-even output will:

    • Double
    • Rise
    • Fall
    • Stay the same

  13. Budgeted revenue is 50,000 and actual revenue is 46,000. What is the revenue variance?

    • 46,000 adverse
    • 96,000 favourable
    • 4,000 favourable
    • 4,000 adverse

  14. Budgeted costs are 80,000 and actual costs are 84,500. What is the cost variance?

    • 80,000 favourable
    • 4,500 adverse
    • 164,500 adverse
    • 4,500 favourable

  15. How should a business respond to a predicted cash shortfall next month?

    • Purchase fixed assets
    • Arrange an overdraft
    • Increase dividend payments
    • Reduce selling prices

  16. What is a major limitation of break-even analysis?

    • Measures profit margins
    • Ignores fixed costs
    • Requires complex software
    • Assumes constant prices

  17. Fixed costs rise from 60,000 to 75,000, with price 20 and variable cost 8. What is the new break-even output?

    • 5,000 units
    • 6,250 units
    • 9,375 units
    • 3,750 units

  18. A business budgets 10,000 units with break-even of 6,000 units. Sales then fall 20% from the budget. What is the margin of safety now?

    • 6,000 units
    • 4,000 units
    • 8,000 units
    • 2,000 units

  19. If costs are favourable but revenue is adverse, what happens to overall profit?

    • Profit must rise
    • Profit doubles instantly
    • Profit may fall
    • Profit stays constant

  20. Price falls from £20 to £18, sales rise from 7,500 to 9,000 units, variable cost is £8. What is total contribution?

    • £75,000
    • £162,000
    • £105,000
    • £90,000

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